Difference between Depreciation,Depletion and Amortisation

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These terms are often used as synonymously of . But each of them has its special meaning and significance.

  1. Depreciation: The term depreciation is used when decrease in the value of a physical asset like plant and machinery,furniture or building is to be recorded.
  2. Depletion: The term depletion is applied to the process of measuring and recording the exhaustion of natural resources such as mineral mines,oil wells,sand quarries ,etc.
  3. Amortization: The term amortisation is applied to the process of writing-down long-term investments in tangible assets such as leaseholds,patents,copy rights,trade marks,goodwill,etc.

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